What Does A Registered Agent Do?
A registered agent can be defined as a company or individual that serves as your official contact point in whatever state you operate out of. The registered agent will receive state and legal documents, as well as service of process, before relaying these items to your organization.
Every LLC or corporation needs to have a registered agent in the state it was formed in (and registered to conduct business in). Failure to appoint a registered agent and maintain one can lead to extreme penalties for a corporation or LLC, in addition to its owner.
Statutory Agent, Resident Agent, and Agent for Service of Process
The term known as “registered agent” is used in most states.
Having said that, a number of states instead use the “registered agent” term, as it emphasizes that an agent needs to be a state resident.
Some prefer to use the “statutory agent” term, which highlights the importance of an agent being required as per a statute. Another term used is “agent for service of process,” which highlights its primary function as the service of process receipt.
Other Responsibilities of a Registered Agent
Besides receiving the service of process, along with notices of a lawsuit filed against either the Corporation or LLC directly, a registered agent will receive other documents considered mission-critical, including:
- A garnishment proceeding notice filed against a staff member.
- Litigation documentation after a lawsuit begins, which includes requests or motions to produce documentation.
- Legal notices.
- Various forms of government correspondence, including tax and annual report notice deadlines.
- Other documents that are compliance-related.
While each one of these documents may be significantly different, each one of them shares a common component — they contain information considered time-sensitive and vital.
What Will Happen if a Registered Agent Has Not Been Assigned?
After you incorporate or have an LLC formed, a registered agent will need to be initially designated. The state you reside in will not approve any Articles of Organization or Articles of Incorporation without one. This requirement is applicable once you register to conduct business in a different state (a.k.a. foreign qualify) by acquiring a Certificate of Authority.
With that said, when registering or forming your LLC, you’ll need to maintain the services of a registered agent within each state that you are legally registered to conduct business in, in addition to your home state. Most states mandate that the existing registered agent is identified on the organization’s annual reports. Each state will expect the organization to have a form called “change of registered agent” filed anytime there is an agent change in your company.
If you fail to have a registered agent maintained, you will be jeopardizing your company in a quartet of ways.
You might not receive essential information you depend on. For instance, if a lawsuit is filed against your company, and a registered agent isn’t available to receive your summons, then the plaintiff will be able to serve you a different way — one resulting in your organization being unable to react to a summons in a timely matter. In such cases, the plaintiff will be able to move ahead with their lawsuit without the participation of your company.
Default judgments may be made against the organization, even if a lawsuit is frivolous, or worse if the case could have been won easily by you. Whenever a judgment gets enforced against the assets of your company, you may not have enough time to reverse any damages done.
Your organization puts its good standing at risk with whatever state it resides in. Losing such good standing may have a detrimental effect on your company. It may stop your organization from allowing a lawsuit into the state, being expanded into another state, and/or acquiring financing necessary to expand the company.
Your organization (as well as you, personally) might be penalized and fined for noncompliance. Sure enough, this is a bit of a catch-22. Without the presence of a registered agent — you’ll be oblivious to the situation, resulting in a continuous increase of sanctions and amounts.
Administratively, the state may dissolve your company. In such instances, you will forfeit any limited liability protection your company provided, leaving you vulnerable to commercial creditors. For the most part, administrative dissolution is easily remedied. However, not for every case, especially if a lot of time has passed already.
Registered Agent: What Is It?
As mentioned earlier, a registered agent can be described as a company or individual assigned to receive any official mail and service of process as a representative of your business.
Every state requires a registered business entity (LLCs, LPs, and corporations) to have a registered agent appointed on formation documentation. Such documents (usually referred to as “articles of incorporation” or “articles of organization”) get filed with whatever state you do business in. Any information that is listed in formation documents become public record.
After a government agency, process server, or individual endeavors to formally get in touch with the company, they will first look up information about the registered agent on state records. They will then send legal documents over to the company’s registered agent. After the agent receives documentation as a representative of their client, they’ll forward any relevant documents to them promptly.
Service of Process: What Is It?
Service of process can be described as the transmission of legal notices (like a subpoena or a summons) to a business or individual. Such legal notices warrant a punctual response, as well as specific actions from whoever receives them. The recipient may be asked to produce documents, appear in court, or cease an activity.
If the recipient happens to be a commercial entity, then the service of process will go to the organization’s registered agent. As an example, if a company is being sued, the process server may send a summons over to the registered agent.
Statutory Agent: What’s Their Role?
A “statutory agent” happens to be a different name for a registered agent. Alternative names include “agent for process of service” and “registered agent,” among others. Why does this one job have so many different names? Every state has statutes and terminology of their own when it comes to business entities. The following is a list of terms typically used in certain states:
- Resident agent: Rhode Island, Michigan, Massachusetts, Maryland, and Kansas.
- Statutory agent: Ohio and Arizona.
- Agent for service of process: West Virginia, New York, Louisiana, and California.
- Registered office provider: Pennsylvania.
- Commercial clerk (domestic corporations): Maine.
- Registered agent: DC and most other states.
The Responsibility of Registered Agent
A registered agent can accept service of process and official notices. Many state statutes mandate registered agents’ availability during regular business hours (between 9 AM and 5 PM).
A registered agent will inform responsible parties when they accept legal documentation. Professional registered agents will inform you digitally moments after they received documentation of yours. If you employ a registered agent, they can be expected to do the following:
- Keep you informed when your company’s annual reports must be sent to your state.
- Navigate you through all business filings.
- Offer you a variety of business expertise.
- Provide you with complement rituals to aid you in filing forms with your state, as well as to track the status of your business.
Is a Registered Agent Necessary?
It is. Registered agents are mandated by various state statutes. They offer a systematic approach to making sure companies can receive legal and official notices reliably.
Succinctly, companies must appoint a registered agent, as lawsuits won’t be able to move forward in a court of law until one party is able to prove that the other was notified properly. Without any evidence of the other party being served, business owners will be able to hide from a lawsuit, making the case that a notification was never received by them.
On the other hand, lawsuits might progress in a court of law without a company knowing that they have been sued. The requirement for a registered agent is there so that the general public and the state can engage with an organization in a reliable manner.
In many states, penalties exist for companies that fail to have a registered agent maintained. Your company’s good standing might be lost, you may be fined, or the company could be potentially dissolved by your state. Having a business reinstated after dissolution can be costly. For instance, the state of Wyoming charges $300 in reinstatement fees for companies that don’t have a registered agent maintained.
Who Can Act As a Registered Agent?
According to state statutes, registered agents need to meet a number of requirements, including the following:
- Residency — generally, a registered agent needs to be a company that has been approved to offer registered agent services within the state, or live in whatever state that they are acting as a registered agent. An organization offering registered agent services must have a physical address maintained in their state.
- Office — a registered agent needs to have their own physical address, one that is situated in the very state that allows them to accept and receive service of process. This location is commonly called the “registered office.”
- Consent — an individual or company needs to agree to the designation of a registered agent. In some states, a registered agent must offer a signature that proves that they’ve accepted such a responsibility. For instance, in Wyoming, Washington, New Mexico, Nevada, Maryland, Louisiana, Kentucky, Florida, Connecticut, and Arizona, signatures by a registered agent are required on formation documentation.
- Availability — a registered agent needs to be available in order to accept official mail and legal documents during standard business hours.
Am I Allowed to Act as a Registered Agent of My Own Company?
Any business or individual that meets the state requirements of a registered agent can act as one. A number of states allow an LLC or corporation to act as its own registered agent.
With that said, you shouldn’t appoint yourself an agent just to save some money. A registered agent has the responsibility of key duties that can significantly affect your company. If you are not available regularly to accept in-person legal notices at the address listed on public documentation, then you should refrain from acting as a registered agent.
A number of setbacks that may transpire if the address of the registered agent is identical to your business or home address. Listing your home address or name can result in a loss of personal privacy since registered agent details become a matter of public record. If the office of your registered agent is the same place as the setting you conduct business in, an officer or process server could issue you legal notices in the presence of your employees, business partners, and clients.
Why Should I Pay for Registered Agent Services?
Professional registered agents revolve their business around the ability to accept documentation when necessary, allowing you to concentrate on running your company. They also provide other benefits. A registered agent can list their address directly on public documents, which in turn keeps yours private. Quality registered agent service providers will be able to scan your documents and send them over to you digitally after receiving them. They can also send you reminders to file state compliance reports, as well as offer you access to services and forms for the sake of maintaining your business.
Here are a number of situations where registered agent services can prove to be quite beneficial:
- You run several locations in a number of states.
- You intend to alter your address in the future.
- You would prefer to keep your residential address private.
- You do not intend to be at work during regular business hours.
- You would prefer immediate access to documentation no matter where you happen to be.
- You would like to receive digital scans of documents either to save as a backup or for safekeeping.
- You would like to receive reminders for any state compliance requirements.
- An actual physical address is not available.
- You would like to be more content.
Annual Reports and Registered Agents
After your company was formed with the state — be it an LLC or corporation — you filed a number of documents about the initial formation. You provided your state with fundamental information pertaining to your business, as well as who you have appointed as a registered agent. Both of these steps finalize the actual formation process. Having said that, you still have other obligations to your state.
While your corporation or LLC is operational, a registered agent will need to be maintained. A majority of states mandate annual report filing so that they can see updated information about your business when they need to.
The Official Representative of Your Company Will Be Your Registered Agent
The registered agent you appoint will serve as the official contact point for the state. The state will send them official correspondence and important compliance details. Your agent will then send this information to the person of contact in your company. Any mission-critical documentation will be comprised of annual report forms and notifications, in addition to tax documents and forms.
Further, your registered agent will receive the service of process — the legal documentation that provides your organization with an official notice when it is being sued. Other essential legal documents sent by a registered agent include subpoenas and wage garnishment notices. Because of how important these documents are, it is imperative that you select an agent with experience and competence. When it comes to official notifications, every moment is precious. Professional agents should be able to relay pertinent information immediately and be properly equipped to do so.
Updating State Records by Filing Annual Reports
Just about every state mandates periodic reports that keep them updated on the essential information of a corporation or LLC. This includes the business’ principle location, names of managers or officers, as well as the name/address of your registered agent. Many states have annual requirements, though some of them have a biannual requirement. In a number of states, franchise tax requirements warrant report filing annually. For example, in Delaware, franchise tax reports are used to quantify franchise taxes each year, as well as keep basic information updated.
Failure to Comply May Result in Administrative Dissolution and Good Standing Loss
By failing to have a registered agent maintained, or not filing annual reports within a designated period allocated by your state, serious repercussions can ensue. An organization that fails to meet such obligations will end up forfeiting their good standing in the state they conduct business in. This may jeopardize financing opportunities and expansion plans because a good standing certificate is normally required for businesses that want to register in multiple states. The certificate is also necessary to obtain several kinds of financing.
Best Registered Agent Services
There are many to choose from; we have listed three of the top registered agents in 2020.